Tweaks won't suffice: Unilever may need to smash the mould

Analysts reckon that a split-up would increase its enterprise value

- ANDREA FELSTED

Hein Schumacher, the new chief executive officer of Unilever, has left the fireworks at home. Instead of announcing a review of the company’s portfolio—which spans beauty, personal care and food—he’s tinkering around the edges. That’s a mistake, and the shares fell about 3% early Thursday.

Schumacher wants to generate better performance from what he has inherited. But if he can’t produce higher growth over the next few years, he will have to tackle the thorny issue of whether Dove soap and Magnum ice-cream even belong in the same company. Then it will be a problem of his own doing, not just one left by predecessor Alan Jope.

Unilever owns a suite of household names and generates almost 60% of sales from emerging markets, which should deliver faster revenue expansion than more mature regions. Yet, on Thursday, Schumacher said there had been a "disconnect" between the company’s strengths and its performance. That is underlined by the fact that just 38% of Unilever’s businesses gained share in the third quarter, down from 48% in the first quarter.

To address this, the CEO will focus on the top 30 brands, representing 70% of the company’s revenue, and will "selectively optimize the portfolio." Big M&As will be a no-no. He also plans to shake up Unilever’s too-comfortable culture, with a new top team and greater focus on results.